Insurance in super: The regulators – What do they
A speech by Peter Kell, Deputy Chair
Australian Securities and Investments Commission, Association of Superannuation Funds of Australia (ASFA) Spotlight on Insurance (Sydney, Australia), 27 February 2018
Thank you for the opportunity to speak to you today about ASIC’s perspective on insurance in super.
Life insurance is a fundamentally important product for consumers, helping them to manage risk and deal with major financial stress. However, there is scope to improve the way that this product is provided to consumers, and there are clearly areas in the broader life insurance market where consumer expectations have not been met. As a result, the life insurance sector is under unprecedented scrutiny across all channels.
There have been major reforms in the area of life insurance advice, with new rules coming into place on 1 January this year, including around remuneration. ASIC has been carrying out a review of direct life insurance, where there have been poor consumer outcomes and higher claims denial rates.
We continue to have a significant focus on claims handling and dispute resolution. We are currently undertaking a ‘deep dive’ into total and permanent disability (TPD) claims following our broader review of claims handling in 2016, and we will report results later this year. ASIC is also working with the Australian Prudential Regulation Authority (APRA) on a comprehensive life insurance claims data project, which I will discuss later. And we will see new standards for dispute resolution introduced as part for the Government’s recent reforms in this area, including the establishment of the Australian Financial Complaints Authority (AFCA).
Insurance in super is part of this broad focus by ASIC, APRA and other agencies. ASIC is undertaking a project looking at insurance in super, where we have sought information from a wide range of trustees. We will report towards the middle of the year.
Overall the message is clear – you need to look at how you can improve the way in which you provide life insurance, to meet evolving consumer needs and community expectations. This applies to both trustees and insurers.